How a Few Wealthy Homeowners Are Making Secret Deals to Halt Development in L.A.

Mike Eveloff is a software developer who's more of a jock than a nerd, with a cheerfulness and a confidence and an attention to detail that evoke an Aaron Sorkin character. He loves negotiating.

Years ago, a board member of a homeowners association called Tract 7260 came to Eveloff, then its president, for help. The board member's new neighbor was converting his house into a duplex. The member wanted it to remain a single-family home.

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"We just did a little math, did a little outreach and convinced the owner that a single-family home would be better," Eveloff says with a grin, squinting in the afternoon sun. He is on his second 32-ounce ice tea. "Negotiating deals, finding ways to bring people together on issues, is fun."

But that sunny disposition masks a few sharper edges. For 25 years, Eveloff played in a "full-contact flag football league," until his body couldn't take it anymore. He mentions, in an offhand way, where the damage might have come from: "lift[ing] people up and throw[ing] them into other quarterbacks. Which, by the way, makes a lovely sound. It really does.

"The approach I had when I was quarterback is interesting," he explains. "First you have to give good instructions to your receivers. And then if someone rushes you, you throw the ball at their head. The next time you pump, they respect it."

Eveloff got his start as a neighborhood activist nearly 20 years ago with Tract 7260, a group that formed in 1956 to negotiate oil drilling rights under its land. Since then, it's worked to minimize the impact of development on Century City's suburban, low-rise community of tree-lined streets and single-family homes.

Along with other neighborhood groups, Tract 7260 helped stop the Beverly Hills Freeway (which was to have connected the 405 and 101 freeways, following roughly Santa Monica Boulevard), limit helicopter traffic over the area and pass Proposition U, the 1986 slow-growth ballot measure.

For decades, numerous private developers trying to build in the area have had to sit down at the negotiating table with the leaders of Tract 7260. When the Century City shopping mall wanted, in the late 1980s, to add a multiplex cinema and food court, it had to talk to Tract 7260. Eventually, a deal was worked out that banned dancing at restaurants and cut off the sale of alcoholic drinks at midnight.

In 2012, the mall wanted to stop offering three hours of free parking with validation. That required approval from the city, as well as from Tract 7260, thanks to an earlier agreement signed in 2001. And so the new owner of the mall, Westfield, sat down to negotiate a deal with Eveloff, who'd been the president of Tract 7260 since 2002.

Westfield made Eveloff a generous offer: $3.1 million, in exchange for the group's approval of the mall's new parking policy.

Anti-development activists in Los Angeles (like the backers of the recently defeated Measure S) have long argued that developers contribute money to the campaigns of elected officials in exchange for lucrative exemptions to planning laws, which constitutes corruption. In fact, that point is rarely disputed.

But developers say that homeowner groups, most of whom oppose growth, also engage in backroom deals.

"If money is paid to a politician, that's corruption, but if it's paid to a community group, it's not," developer Mott Smith complains.

“Essentially, [homeowner groups] shake down developers for private settlements. They complain, ... then they settle privately with developers for community benefit funds, and we never really know where it goes.” —an L.A. land-use consultant

Sometimes the developer modifies the project to mollify the community's concerns. Sometimes the developer offers to pay for certain infrastructure improvements meant to offset the perceived impact of the project — a new traffic light, perhaps, or a sound wall. And sometimes, the developer just cuts a check.

"Essentially, [homeowner groups] shake down developers for private settlements," says one land-use consultant, who asked not to be named to preserve the ability to negotiate with homeowner associations. "They complain, cite the project, raise their voice, and then they settle privately with developers for community benefit funds, and we never really know where it goes.

"It's very common. And it's getting more common."

These deals nearly always include a confidentiality clause, shielding them from public scrutiny. But a lawsuit has brought the details of the Westfield/Tract 7260 settlement to light and is raising questions about why these deals are made and who they benefit.

Westfield initially offered to pay $3.1 million in community benefits chosen by Tract 7260. That deal later was amended to have the money go to a nonprofit organization chosen by the board of Tract 7260. The board chose Fix the City, a sort of homeowners association super-group started, in 2007, by Eveloff and two other neighborhood group leaders, James O'Sullivan and Laura Lake. Though all three are Westsiders, they focused Fix the City on citywide issues such as fire department response times and infrastructure improvements.

In January 2015, about two years after the money changed hands, the current board of Tract 7260 sued Fix the City and Eveloff, who had resigned as Tract 7260's president in April 2013. The suit charges, in essence, that Eveloff arranged for money that was earmarked for improvements in the Tract 7260 neighborhood to go instead to Fix the City, a nonprofit that he heads.

"Eveloff decided to use the position of trust he held both as the negotiator purportedly acting on behalf of Tract 7260 and as its president to accomplish his own personal, social and political agenda instead of the purposes for which Tract 7260 was formed," the complaint reads.

All of the current board members of Tract 7260 (which recently changed its name to Century Glen) contacted by L.A. Weekly declined to comment — "because of the pending litigation," says its current president, Stacy Antler.

"This dispute, what it's really about is them ... trying to [seize] funds that they never could have had — ever," Eveloff says. "It's just, 'We want the money.' Why? 'We want the money.'?"

Many of the earliest homeowners associations in Los Angeles, founded in the 1910s, were formed at least in part to enforce racial segregation.

"Homeowners associations first appeared on the political scene in the 1920s as instruments of white mobilization against attempts by blacks to buy homes outside the ghetto," Mike Davis wrote in his landmark 1990 book, City of Quartz. "Where tracts were not already legally bound by subdivision deeds, white homeowners banded together as 'protective associations' to create racially specified 'block restrictions.' ... In this fashion 95 percent of the city's housing stock in the 1920s was effectively put off limits to blacks and Asians."

Over time, the homeowner groups' focus shifted away from who could live in their neighborhoods and toward what could be built there. More often than not, that meant fighting density and the construction of apartment buildings and office buildings. The groups began to align with environmentalists, working to create the California Coastal Commission and the Santa Monica Mountains Conservancy. By the 1960s, the groups began to form larger coalitions, such as the Hillside Federation, and to acquire an intimidating level of expertise in land-use law.

"Some homeowners associations have always been very powerful players in development decisions," says Michael Manville, an assistant professor of urban planning at UCLA. "Some are very progressive, and really want to work to increase the housing stock and work with the planning department.

"Of course, there are others that are very hostile to development and change in their neighborhood, and have consented to change only after taking confidential payoffs from developers."

In the 1980s, for example, a coalition of Westside homeowners associations fighting a new hotel, the Sofitel, worked out a deal that included $1.05 million for neighborhood improvements.

"If that's the American way, I'm crazy," the hotel's developer, Sheldon Gordon, told the Los Angeles Times in 1989. "It was blackmail."

“I think the public may have a perception that the payments to a group or a private organization could be extortion — pay-to-play in reverse.” —Sherman Oaks Homeowners Association president Richard Close

Even the then-president of Tract 7260, John H. French, chided the homeowners for taking money. In a letter to the editor published by the Los Angeles Times, French urged the homeowner leaders to "examine their priorities and to ensure that money and prestige have not diverted them from their primary purpose."

Today, some of the most prominent homeowner associations eschew the practice of taking payoffs.

"Our group prefers any mitigation money given by the developer to be controlled by the City Council office, rather than our group," says Sherman Oaks Homeowners Association president Richard Close. "I think the public may have a perception that the payments to a group or a private organization could be extortion — pay-to-play in reverse."

But other neighborhood groups say they are simply looking out for themselves.

"Since we represent the community, we want some compensation for the impacts that they're causing," says Harald Hahn, one of the homeowners who took part in the Sofitel settlement. "That's the foundation of all these settlements. We're not in the business of making a living off of these developers."

Indeed, there is no evidence that any neighborhood leaders are personally pocketing developer settlements. Hahn says deals involving money are the exception rather than the rule. But it's hard to verify this claim, since the settlements are nearly always protected by confidentiality clauses.

"Now, no one can tell if a community group is supporting a project because they got money," says Smith, the developer. "There's a way to find out with politicians. Community groups are completely opaque."

Neighborhood councils, which were established in 1999, are regulated by the city, are elected by all residents and stakeholders, and must follow the Brown Act, meaning they must meet in public. Homeowners associations, by contrast, are bound by no such laws. They make their own bylaws. Only dues-paying members can vote. They are not subject to open-records laws. In many cases, it's not clear how many members they have. Tract 7260's membership, according to Eveloff, averaged around 250 people. Hahn says his organization, the Burton Way Homeowners Association, doesn't even have formal members.

"We are basically a voluntary organization," he says. "As the need arises, we get together."

He has headed the organization since its founding, more than 30 years ago. "I can't find anyone to replace me," he says. "People don't want to do it, because they see how much work is involved."

In January, the City Council signed off on shopping mall magnate Rick Caruso's plan to build a luxury apartment complex near the Beverly Center. The approval came only after Caruso made a number of concessions, including shrinking the height of the tower by 55 feet. Caruso also agreed to pay for half a million dollars in repairs to a condominium building across the street, Westbury Terrace.

In exchange for that generous offer, the Westbury Terrace Homeowners Association reversed its position on the project. The association had been vehemently opposed to it, but last summer its president wrote a glowing letter of support to the Mid-City West Community Council: "It makes no sense at all to oppose this project logically."

The Beverly Wilshire Homes Association, apparently immune to this sort of logic, in February filed a lawsuit against Caruso's new tower.

"We've had enough," says the association's president, Diana Plotkin. "We're raising children in our neighborhood streets. We don't need all this extra traffic."

The Burton Way Homeowners Association, run by Hahn, supports the project. Asked why Hahn was supporting it, Plotkin replies: "No comment. I know why, but I'm not saying."

Hahn laughs off the intimation that he was paid for his support.

"I've known Rick Caruso for 35 years," Hahn says. "We came to an agreement. We were happy with it. ... We didn't ask him for donations. But we asked him to make changes to [the] project. He's being milked quite a bit."

The Beverly Wilshire Homes Association is suing Caruso under the California Environmental Quality Act, or CEQA. The 1970 law established a review process for projects requiring discretionary approval from state or local government, so that their environmental impacts are disclosed to the public. Developers must produce detailed CEQA studies, covering numerous impacts to the surrounding area — everything from traffic and parking to construction noise and the aesthetic details of the new building.

Anyone can file a CEQA lawsuit, challenging the studies: a competing developer trying to build a similar project at a nearby site, a labor union looking for a project/labor agreement, or a homeowners association looking for concessions.

Jennifer Hernandez, a land-use attorney and CEQA expert, says that roughly half of all CEQA lawsuits are decided in favor of the plaintiff.

"There's about 100 questions you have to get right in CEQA-land," Hernandez says. "If you lose any one of them, you lose the case."

It is ironic, perhaps, that an environmental law has become one of the main weapons in an arsenal used to target development in a city's core. In Los Angeles, CEQA is most often used to fight apartment buildings. But many environmentalists argue that the dense, urban development these projects would bring to the city is necessary to reduce housing prices and fight climate change — since, in theory, density encourages the use of public transportation.

The Target store that was under construction at Sunset and Western has been halted by neighbors' protests.

Ryan Orange

More often than not, both sides have an incentive to settle. For a developer, time is money. And the mere existence of a CEQA lawsuit is enough to kill a construction loan or a government grant.

"If you go through the math of a cash settlement versus a three-year litigation process, the cash settlement pencils out," Hernandez says.

The math cuts both ways. Homeowners associations have to pay for lawyers, too, and their leaders often spend their own time attending committee hearings and reading the fine print of draft Environmental Impact Reports. And even if they win, often the best they can do is delay the project and recover attorney's fees.

"This is a business decision," Eveloff says. "Do I spend the time and money to delay [a project] for a year or two, or do I try to secure benefits for the community?"

But stories abound of shakedowns that had no discernible public interest.

"I worked on a project for a nonprofit that was building a museum," says land-use attorney Paul Rohrer. "A very small museum. After the project was announced in the media, we were approached by a community group that said they thought the project would have negative effects on the community, but those negative effects could be remediated if our client donated a million dollars to projects chosen by the group. A percentage would go to the group itself. That was their ask."

Rohrer declined to name the museum, or whether the offer was accepted.

"So you see this stuff," Rohrer says. "People end up paying settlements where the money may not accrue to the public's advantage."

In 2007, a Chicago-based developer named JMB Realty wanted to build two 47-story buildings and a 12-story building on an empty lot it owned in Century City. The project was larger than the city's planning laws allowed, so JMB needed to apply for a series of exemptions. It also needed to sit down with homeowner groups.

According to several media accounts, JMB first tried to cut a deal with seven homeowner groups, including Tract 7260, worth millions of dollars. But City Councilman Jack Weiss scuttled the deal. He thought any sort of settlement money should be controlled by the council office and should be subject to oversight.

This only served to increase the enmity between Weiss and homeowner groups, which began a campaign — headed by Eveloff — to recall the councilman. The effort failed to obtain the requisite signatures to qualify for the ballot, but the homeowners got their revenge. Not only was Weiss defeated in his bid for city attorney by Carmen Trutanich (a neighborhood group favorite), the groups did eventually reach a settlement with JMB. According to the Times, JMB agreed to pay $7.25 million into "a mitigation fund overseen by four groups," including Tract 7260.

The towers, meanwhile, were never built. Years later, JMB proposed building a 37-story office building on the same site. Land-use attorney Ben Reznik, who was working for a rival developer opposed to the project, was surprised to see Eveloff at hearings arguing in favor of JMB's revamped proposal.

Eveloff won't say how many settlements his groups have taken part in over the years: "A, I wouldn't know off the top of my head. B, even if I did, I wouldn't tell you. Between zero and 100."

In addition to Fix the City, Eveloff heads at least two other nonprofits: Friends of West L.A. and the Westside Coalition. He's also vice president of Neighbors for Smart Rail, the group that unsuccessfully sued to stop the Expo Line extension from being built.

Publicly available tax forms show fluctuating revenues for these organizations. Westside Coalition, a 501(c)(4) whose stated mission is to "promote social welfare by facilitating neighborhood safety and security improvements and advocating for other improvements to the environment," took in $80,000 in 2012, $300,000 in 2013 and no money in 2014, the last year for which such forms are available. Friends of West L.A., a 501(c)(3), took in just $14,660 in 2012, $391,922 in 2013 and $3.1 million in 2014.

The money, Eveloff says, comes from settlements and an annuity that was created "through various settlements."

Friends of West L.A.'s mission is to "support local infrastructure including parks, schools, libraries, police departments and fire stations." Eveloff says the money is divvied out according to a set formula. Police officers and firefighters in the area say the money has been a tremendous help.

"They've done so many things here," says Captain Clifford Smith at Fire Station 59, who points to new flooring for the office and a barbecue pit out back. And he says that when Eveloff runs into firefighters who are out having lunch, he always picks up the tab.

"A lot of times we may not get the recognition," Smith says. "It's huge when someone just acknowledges our presence."

But not all settlement money goes back into the community. Some of it goes to finance other lawsuits.

Fix the City was incorporated as a nonprofit in 2012, just as it received the first $200,000 installment of the $3.1 million Westfield settlement. Since then, the organization has filed at least five lawsuits against the city: two over the mobility plan and one each over the Hollywood Community Plan, the Frank Gehry–designed 8150 Sunset Project in Hollywood and the Catalina project in Koreatown. Real estate developer Casden Properties cut a deal with Fix the City, agreeing to limit the commercial space of a new project at Pico and Sepulveda and to pay for $215,000 worth of community amenities, according to Eveloff. More recently, a settlement with the Academy of Motion Picture Arts & Sciences avoided the need for a lawsuit over a new museum (details of the settlement have not been made public, and it's unclear if the Academy paid any money).

With the exception of the Casden project, Fix the City's energy has been spent far from Tract 7260's home turf.

"One of the nice things [about] the United States, we generally fight wars somewhere else. We try not to fight wars where you are," Eveloff says. "When you see some of these projects, you create a precedent. The Hollywood Community Plan ... you had to stop it there before it became a precedent."

In the waning days of his doomed City Council campaign against District 5 incumbent Paul Koretz, Jesse Creed sent out a press release calling for more transparency when it comes to deals between developers and neighborhood groups.

"Residents are rightly frustrated when developers meet with City Hall politicians behind closed doors," the statement read. "Fewer people know about the tiny group of neighborhood power brokers getting developer cash in our broken pay-to-play planning system — the neighborhood power brokers that manage secret million-dollar hush money from developers with opaque public benefits."

Though it did not mention Eveloff by name, it did mention the Tract 7260/Fix the City lawsuit and alluded to Eveloff's other group, Friends of West L.A.

"Some of the developer hush money does go to worthy causes, including police, firefighters, parks and local schools," the statement continued. "Who decides what is given and to whom? No public elections or official appointments occur. No public meetings are held. The gifts may be good. They may be bad. Nobody knows — except them."

In contrast to his predecessor, Jack Weiss, Koretz has encouraged developers to deal with prominent neighborhood leaders like Eveloff — who, as Creed points out, is still being invited to negotiate with developers even though he is no longer president of Tract 7260.

"Paul knows what game is played," Creed says. "And he is facilitating it. What's less clear is if he's facilitating it because it's the path of least resistance, or if it's a way to buy political support."

John D. Russell, left (used with permission of the campaign); Paul Koretz campaign

Koretz did not return our calls, but he did send a written statement, reading in part: "From the day I took office I said I would always try to give every legitimate stakeholder a seat at the table and empower them to influence what happens in the district. Sometimes that dialogue leads to agreements between developers and the neighborhood organizations that I respect but am not a party to. As long as such agreements are within the bounds of propriety and legality and help lead to a project proposal that I can live with, I don't think it's my place to be second-guessing them."

In regard to Eveloff, he wrote: "He and Friends of West Los Angeles provide funding for schools, fire stations, libraries, etc., every year. Negotiating those funds from developers makes a fair amount of sense — they impact our infrastructure, so they should contribute toward it. Mike's efforts do a lot of good for our community."

Koretz is hardly the only councilmember who encourages developers to meet with homeowner groups.

"When you go to meet with City Council staff, the first question is, 'Have you met with such-and-such neighborhood association?'?" says Smith, the developer.

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The Westside is especially rife with such groups.

"Homeowner groups in Council District 5, they have quite a bit of power," says Stuart Waldman, president of the Valley Industry and Commerce Association. "You have a lot of angry, wealthy individuals who are very organized. And [Koretz] listens to them."

After he sent out his press release, Creed received a letter from Fix the City's lawyer, demanding that Creed retract his statement and issue another one correcting the record. Creed declined, though he did remove the press release from his website. Similar cease-and-desist letters went to neighborhood activist Jonathan Weiss after he posted a story about the fracas on the website NextDoor.

When asked if this was a rather hardball tactic, Eveloff says: "Hey, lawyers do what they do, man. What are you supposed to say, please don't hurt me? Hardball tactic? Throwing a football at someone's head? Maybe. But if you don't stand up for yourself, people are going to roll right over you. That's what I've found."